Algeria's Sonatrach signs MOU with Exxon to boost partnership

FILE PHOTO: A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes

ALGIERS (Reuters) - Algeria’s Sonatrach has signed a Memorandum of Understanding (MOU) with Exxon Mobil Corp to pave the way for talks on exploration opportunities in the OPEC member North African country, the state-owned firm said in a statement on Monday.

Algeria has been seeking foreign partnerships to boost output and exports which have dropped in recent years due to growing domestic demand and a lack of foreign investment.

The export volumes fall and a sharp drop in global crude oil prices have significantly hit the country’s energy earnings, the main source of state finances.

The latest oil price crash that followed the novel coronavirus outbreak forced the government to cut public spending by 30%, delay economic and social projects and halve Sonatrach’s planned investment for 2019 to $7 billion.

In a bid to attract foreign investors, Algeria late last year approved a new energy law offering incentives including easing the tax burden.

“The signature... (on the MOU) shows the interest of the parties in evaluating the options for collaboration following the promulgation of the new hydrocarbons law,” Sonatrach said in its statement.

Reporting by Hamid Ould Ahmed; Editing by Ken Ferris